If you have retired and can access your super, is it a good idea to withdraw funds to pay off your outstanding home loan?
Where you have met a condition of release to access super, such as retiring after age 60 or turning 65 even if you are still working, you can start a pension income stream from your super. You can also withdraw lump sums from your super.
In this article, we discuss the two most common options in such a scenario:
- Withdraw a lump sum from your super to reduce or fully pay off your home loan (or keep it in your offset account) OR
- Keep making the loan repayments using your income sources such as the pension income stream, investment income and/or Age Pension.
Using case studies, we cover some of the key considerations retirees commonly face.
Before you act, you should seek financial advice tailored to your personal situation and goals.
Free eBook
Retirement planning for beginners
Our easy-to-follow guide walks you through the fundamentals, giving you the confidence to start your own retirement plans.
"*" indicates required fields
Important considerations
The factors below and the complex interaction between them can impact your financial situation:
- Ability to make additional repayment – if you are on a fixed interest rate, many banks do not allow additional repayments to be made until the fixed rate period is over.
- Need for capital – if you reduce or fully repay your home loan, then you will lose access to the capital you have withdrawn from super and the income it would generate, unless you retain it in an offset account.
- Age Pension – if you are eligible for the Age Pension and withdraw a lump sum from super and keep it in your loan offset account rather than closing out your loan, you may not receive any additional Age Pension benefits as your financial assets won’t have reduced.
Before making important decisions that could impact your retirement income, you should consider getting independent financial advice.
Leave a Reply
You must be logged in to post a comment.